Collision Insurance: What It Covers & When You Need It

Collision insurance or collision coverage is part of your automobile insurance policy that covers any damages to your vehicle caused by an accident. Collision insurance will only cover damages due to accidents you cause. If damages are caused by an accident due to another driver's fault, the cost of repairs will be covered by that driver's insurance policy. In general, financing and leasing companies require their customers to have collision inurance.

Scope of Coverage

If your car is new or in good shape, collision coverage will help you pay for repairs and replacements if an accident occurs. It is advisable to purchase enough collision coverage to fully replace the car. A car that is worth more than $4,000 should have adequate collision insurance.

What Is Not Covered

Normal wear and tear of your vehicle and regular maintenance costs are not covered by collision insurance. Collision coverage will only cover the cost of the damages that were made due to an auto accident, or certain other events that are specifically covered by the insurance policy.

Deductible

After an auto accident, a claim must be filed. A mechanic will examine the car to provide an estimate of the damages. The difference between the estimate amount and the deductible amount is what the insurance company will pay. The price of the deductible will vary depending on the policy.